What to expect from a Commercial Realestate Agent?

Question

I have a 16000 SQFT Strip mall in Saint Marys, GA which has 4 small units (1000 Sqft) that are rented and 1 large unit (12000 SQFT) which was a furniture store before. I am trying to find an agent that will assist me in leasing the space.

I do own other commercial properties, in general what I have seen is that the realtors list it on loopnet and MLS and wait for the leads to come by. I have had only one agent so far that was proactive and spoke to tenants in the area and stole a tenant from another building to mine.

My question is, should I expect more from a realtor than just listing it on Loopnet and MLS?

Martin Z. · Answer

I took matters into my own hands a while back, I do all the leasing myself. photos, videos, canvassing, flyers, listings, mailers , etc. If you deal with a broker who's not active, the major loss in $$$ comes from the vacancy factor. The commission isn't the big deal. But in an ideal situation if it's a great property, loopnet /costar is good enough, tenants will hunt you down for it.

Joel Owens · Answer

They do a lot of leasing.

http://theshoppingcentergroup.com/our-services/

Not an endorsement but I just see them pop up often for leasing.

Joel Owens · Answer

I would clarify this by saying you are asking about a commercial leasing broker/ agent either repping for a tenant or the landlord. Different animal than a commercial transactional broker. Some do both but the best focus on one thing. At least I enjoy the transactional side and not leasing.

Are you offering a competitive leasing commission  total and is your landlord leasing broker offering a good co-op to the tenant broker if they do not double end the deal?? You want to make sure they are not trying to offer  a low co-op to only push their tenant contacts and turn off tenant rep brokers from showing your property.

If they do leasing full time they should have a Costar tenant package that shows surrounding buildings and ones coming up for lease renewal. They go walk those centers and ask for tenant business owners and ask if they are looking to make a change.

12,000 sq ft is a junior box size and takes longer to rent out. Lot's of tenants in the 1,000 to 3,000 sq ft range. 12,000 is very limited. Instead of waiting for a junior box now may be the time to split up that 12,000 sq ft into 4 or 5 smaller spaces with demising walls. Likely to get higher rent per sq ft with the smaller spaces than one large space as they typically want a low per sq ft for filling that large of a space. So for instance junior box wants 12 a sq ft where smaller spaces pay 18 sq ft.

You also give a more diverse tenant mix to the center and have lower breakeven occupancy serving the debt.

You have 16,000 sq ft and the 12,000 sq ft represents 75% of your space. To risky to me unless it is a credit rated national tenant backing that space.

If you split into 6 smaller spaces of 2,000 sq ft you would have 10 spaces. One goes dark you would be looking at say 10% vacancy or so.

Do you pay leasing commission upfront once tenant occupies the space or do you do some upfront and some ongoing?? What about TI's to the tenant?? Are you competitive for the area??

Raj Kumar · Answer

@Joel owens - Thanks again. Looks like the closest one is Jacksonville, FL.

@Eric Odum - Thank you. I have talked to 3 or 4 small companies, but have not found the right one yet. Most of them are interested in managing and leasing, but I would like to manage it myself.

@Martin Z - You are absolutely right about loss in vacancy $$$.  I have an office property that's been sitting on the market for almost 9 months, but the realtor has not done anything other than list it. I have been thinking of marketing myself, it's a little harder as I don't live in the state. How did you come up with the mailing list? I was planning to collect addresses from the chamber of commerce and send out fliers.

Eric Odum · Answer

@raj

@Raj Kumar it is tough in those tertiary markets to find specialists.  You "tend" to find more commercial generalists and cross over agents (those who do both residential AND commercial).  As a general rule, neither tend to have deep ties to retailers or are members of ICSC.

I would suggest you check out ICSC.org and see who works the areas with your investments.  There are, occasionally, good teams in these smaller markets who have 3-4 agents on a team who set up good systems to accomplish what you are trying to accomplish.  Not all smaller markets are so lucky, though....but start with ICSC and see how that goes.

Raj Kumar · Answer

Yes, I am asking about a commercial leasing broker/agent. Well So far I have paid anywhere from 6 to 10% commission and that's what the agents asked for. I will even pay 10 to 20% depending on the type of service. I don't want to pay someone 10% if all they are going to do is list it in loopnet. What is the standard commission rate for leasing agents you have described?

All the agents that I have used do both selling and leasing and I don't think anyone had co-star. May be because all of my properties are in B centers(Myrtle Beach, Saint Marys, Peachtree city, Pensacola) and co-star does not collect information like they do in Atlanta. How do I find agents that do leasing only?

Yes, I am thinking about breaking them in to 3 or 4 units.

I pay the commission once the tenant occupies. Again that's what I was asked by the agent.

Thanks for taking the time to reply to my post.

What to expect from a Commercial Realestate Agent?

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